Bill Seeks to Fix Deviation in Ag Transfer Tax

MACo offered written testimony in support of SB 306, Agricultural Land Transfer Tax – Calculation, to the House Ways and Means Committee on March 23, 2016.

This bill would clarify how a State-imposed surcharge is applied in the calculation of the state and county agricultural transfer taxes. No testimony was offered in opposition to the technical correction.

From the MACo testimony,

In 2008 the General Assembly enacted SB 622, which among other things added a 25% surcharge to the State’s Agricultural Transfer Tax. The surcharge was meant to help provide additional funding for the Maryland Agricultural and Resource-Based Industry Development Corporation (MARBIDCO) and the Maryland Agricultural Land Preservation Foundation.

At the time, MACo took no position on SB 622 as the wide understanding was that the surcharge was separate from the State’s agricultural transfer tax calculation and thus would have no effect on the amount of funds collected by a county through its local agricultural transfer tax. This understanding was established through the bill’s fiscal note and MACo’s communications with SB 622’s primary sponsor, Senator Mac Middleton, and MARBIDCO officials.

This understanding was upset by the recent Maryland Court of Appeals decision in Montgomery County, Maryland v. Jean K. Phillips, et al., Misc. No. 20, September Term, 2014 (Filed October 16, 2015). The Phillips case essentially held that surcharge was included as part of the State’s transfer tax calculation and that local agricultural transfer taxes must be reduced by the amount of the surcharge.

SB 306 would merely restore the method of calculation intended by the General Assembly and involved stakeholders.

This bill passed the Senate (47-0) on February 25, 2016.

For more on 2016 MACo legislation, visit the Legislative Database.

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